Inflation is high despite solid incomes and spending data, posing a challenge for the Fed

From Investing.com: 2025-02-03 03:49:00

Personal Consumption Expenditures, excluding food and energy, increased by 0.2% in December and 2.8% over the last year, surpassing the Fed’s 2% target. Inflation growth accelerated for the 3rd consecutive month due to rising energy costs.

Headline inflation rose by 0.3% in December and 2.6% over the last year. Total spending increased by 0.4% in December and 5.3% over the last 12 months, with personal incomes growing by 2.7% during the same period.

Consumer spending on services grew by 0.6% in December and 6.7% over the last year, while spending on goods increased by 0.9% in December and 3.5% over the last year. Inflation-adjusted consumer spending is now 15% above pre-COVID levels.

Inflation and personal incomes aligned with expectations, while personal spending exceeded them, indicating consumer confidence and economic activity. However, inflation remains high, posing a challenge for the Fed’s interest rate policy. Fed Chair Powell suggested maintaining current rates, signaling a prolonged inflation battle ahead.



Read more at Investing.com: Inflation Remains Stubbornly High, but Incomes and Spending Data Stay Solid